Innovation · Leadership

The crushing force of retail insularity

Urban Outfitters is the latest retailer to be called out for the insularity of its board leadership. And rightly so. The lack of diversity, measured on just about every relevant dimension, has been a persistent and intractable issue for many large company boards.

It’s hard to imagine an industry that is more in need of outside, diverse and challenging perspectives than retail. New technology, shifting consumer desires and disruptive business models have been wracking the industry for more than a decade, with the pace of change only seeming to accelerate. We now face profit squeezes, layoffs, store closings and bankruptcies at unprecedented rates.

Yet few of the legacy retail brands being hammered (some to the point of extinction) by these seismic changes have done much, if anything, to bring in Directors with deep knowledge of the changing technology, business model and consumer landscape. I warned about this five years ago, spurred on mostly by noting the appalling lack of relevant expertise on the J.C. Penney board to effectively challenge the reckless “hail Mary” strategy being promulgated by then CEO Ron Johnson. While clearly Penney’s needed to do something bold to get back on track, it should have been obvious how wrong-headed many of the ideas were. A stock that traded around $40 per share when Johnson started now trades at under $6.

The insularity on the part of corporate boards is but one issue plaguing traditional retail. The last two retailers I worked for as a senior executive, as well as many of the consulting clients I have advised, suffer mightily from a culture of insularity that extends beyond board composition. Show me an organization that is losing customer relevance (and resultant market share) and chances are you’ve shown me a company that is inwardly focused on process, budget allocations, cost reduction and intramural warfare between rival internal factions. These brands know appallingly little about the competition and potentially game-changing technology. They lack deep and actionable customer insight. Mostly, they are paralyzed by analysis and unwilling to take the risks that today’s fast-moving retail industry demands.

Extreme insularity within retail organizations is, arguably, the single biggest barrier to a brand making the changes necessary to thrive, must less survive, in what some call the “retail apocalypse.” Providing leadership opportunities (board or otherwise) to folks with diverse backgrounds is, in my mind, a moral imperative. But more than that, it is just smart business. Action must be taken, not just lip service. As Jack Kornfield reminds us: “The trouble is you think you have time.”

urbanoutfitters-storefront

A version of this story recently appeared at Forbes, where I am a retail contributor. You can check out more of my posts and follow me here.  

Innovation · Leadership

Premature celebration

Imagine the lead runner in a marathon stopping at Mile 6, throwing his arms up in the air, engaging in a series of high fives and a receiving a dousing of champagne.

Imagine your Captain coming over the loudspeaker to welcome you to London while your plane is still over the middle of the Atlantic.

Imagine spiking the football a yard before you’re actually in the end zone.

Imagine a bunch of legislators taking a victory lap for transforming one sixth of the US economy without any impact data and well before a law has actually been passed. Well, I guess that’s not so hard to imagine.

But I digress.

Your cool entrepreneurial concept is not the same as an actual viable business.

My idea for a book is far from a published manuscript. And all those blog drafts I have saved? So what, who cares?

Unless it ships, it might as well not exist.

To be fair, we have to start somewhere. And until we’ve started, we remain stuck in intention, wishes, hopes and dreams. So good on you for launching, for taking that first step, for putting yourself out there.

So, sure, let’s feel good about our progress along the way. Appreciating the journey and enjoying the ride is important. But let’s refrain from declaring victory until we’ve made a real difference in the world.

It turns out, if it’s important, people will remember what you did.

And trust is a very hard thing to win back.

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Inspiration · Leadership

We over me

The other day President Trump talked about how “my military” was successful in carrying out a bombing run.

Regardless of how one feels about the merits of taking military action, or which side of the aisle you happen to sit on politically, it’s hard to imagine a leader who deserves less credit for the strength and skills of the US armed forces. It’s also shocking in its failure to recognize who foots the bill. Criticism was deservedly fast and furious.

Contrast that with superstar golfer Jordan Spieth (who, by the way, is nearly 50 years younger than Trump). It’s rare for Spieth to not say “we” when talking about his play. In fact, the times when he tends to use “I” or “me” are when he hasn’t played particularly well. In a sport which is highly individualistic, he is quick to credit his team; to value the we over me.

Of course, we drive every day on roads we didn’t pave.

We sit in offices we didn’t build.

We use an internet we didn’t design and don’t maintain.

Almost of all us eat food we neither planted, nor tended,  nor picked, nor hauled to the store.

It’s easy to be selfish, to value the me over we.

And often harder to give credit where credit is due.

Harder still, it seems, to be grateful for all all we have whether we deserve it or worked for it or had it fall into our laps by luck or some measure of grace.

 

 

Being Remarkable · Innovation · Leadership

Yeah, but what if we don’t?

All too often we can find ourselves ruled by fear, both subtle and profound. Faced with going out on a limb, being vulnerable, trying something entirely new, it’s easy for The Resistance to take over, for the lizard brain to kick in, for us to tell ourselves the time isn’t right or that we aren’t quite ready.

For many us, it’s not the least bit difficult to imagine the embarrassment, pain or all manner of calamities that might result from exposing our ideas to the world, starting our own new business, choosing to be the one to stand up to injustice, aggressively pushing our organizations to innovate or embarking on just about any endeavor that is fraught with risk.

I’m reminded of what Mark Twain supposedly said: “there has been much tragedy in my life, some of which actually happened.”

It turns out we humans seem to be rather good at naming and feeling the risk of doing something, but maybe not so good at seeing the reward. We ask ourselves the “what if we do?” question and then frequently talk ourselves into stopping, waiting or hoping someone else will act instead.

Yet when it comes to pondering the work that matters perhaps a better question would be “what if we don’t?”

If we don’t innovate, our organization or business might not only stagnate, it might cease to exist entirely.

If we don’t speak up against hate, we enable injustice to spread unchallenged.

If we don’t vote, we get leaders that are at best clueless; at worst dangerous.

If we don’t act to unleash our potential, our desire, our creativity we, to paraphrase Thoreau, can easily fall into the trap of living lives of quiet desperation and go to our graves with the song still in us.

Too often we think the risk is in acting, when it is precisely the opposite.

Too often we believe we have more time, when in fact it’s much later than we think.

Too often we find ourselves asking the wrong question entirely.

 

 

Leadership

Blaming your predecessor

Some 20 years ago I took a transfer within the retailer I was working for at the time and was promoted to my first real marketing leadership position. I inherited a colossal mess. Our division’s sales were down month after month and margins were collapsing. As far as I could tell, nothing that marketing had tried over the past several years had improved the brand’s positioning one iota, much less successfully driven critically needed incremental traffic to our stores.

As I embarked on this Herculean challenge I initially leaned into what was, in retrospect, an extremely juvenile and pointless tactic that only served to underscore both my immaturity and inexperience: I blamed my predecessor.

Now to be sure, he hadn’t done a great job. But, to be fair, he was dealt a horrible hand and, in many respects, was in way over his head. Regardless, as far as I could tell, he did the best he could given the circumstances and always operated from a place of integrity.

Yet all of this was beside the point.

There was, of course, nothing wrong with acknowledging the reality I found myself–and the business–in. There was nothing wrong with dissecting the root causes of our problems. There was nothing wrong in learning from what worked and, as it turned out, mostly from what didn’t.

But where I failed as a leader was going into blaming mode rather than accountability mode. I chose to tap into the drama of feeling like a victim rather than the creative energy of being empowered.

The fact was that nobody forced me to take the job. Nobody had given me the advice that it was a good idea to focus my energies and attention on assigning blame and dwelling on the past. Most importantly, nobody had provided me with a time machine that allowed me to go back in time to fix all the things I was complaining about.

Our egos love avoiding difficult situations and deflecting attention away from accepting the challenges and opportunities of the present moment. Slipping into the blame game is seductively easy because it takes us off the hook and shifts the spotlight to an imagined perpetrator who surely must be the source of our problems.

Yet when we sign up to lead, we need to do just that. No blaming. No avoidance. No deflecting. And definitely no whining.

It’s taken me a long time to learn this lesson. Sadly, many in positions of responsibility and authority are still learning.

Not everyone wants to (or deserves to be) in a leadership position. But if we ask for the keys, we need to learn how to drive responsibly. And most importantly, we need to start driving.

As it turns out, much of the time winning is easy. Governing is harder.

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Leadership

We’re never ready

Oh sure, maybe we’re ready for the easy stuff. Ready to leave for work, make dinner, hop in an Uber, do the laundry, pay the credit card bill.

But the work that matters, that enlivens the spirit, that changes us, our tribes and the world around us? That’s another thing entirely.

Naming our fear is helpful, because it is our fear that keeps us stuck.

Letting go of any notion of perfection–the right time, the right skills, the right conditions–is useful as well.

Being willing to get started–to accept that the only way we can ever really know that we are on the right path is to start walking; slowly at first, but faster and faster as we gain confidence–is essential.

Because here’s the thing…

The conditions will never be perfect.

I have no idea what’s going to happen in the future. And neither do you.

Chances are you already have everything you need to take that first step.

And sure it might not work.

Like it or not it’s later than we think.

The fact is we’re never really ready for what really matters.

But we can still start.

What better time than now?

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Leadership · Omni-channel · Retail · Strategy

Sears: Is The End Finally In Sight For The World’s Slowest Liquidation Sale?

When I left Sears in 2003, I was quite pessimistic about the company’s long-term prospects. Some initiatives we had put in place during a two-year strategic re-positioning effort were gaining traction, but most key metrics were alarming. The apparel business was well below a sustainable productivity level. The appliance and home improvement segments–which accounted for roughly 50% of our enterprise value–were losing market share to better positioned competitors, mostly notably Home Depot and Lowes. And the one strategy that might have saved us was no longer a feasible option. My fear was that Sears’ slow death was inevitable.

The following year Eddie Lampert put two failing retailers together and promptly made a bad situation even worse. While Sears and Kmart both suffered from challenges driving revenue, Lampert focused on cutting costs. As leading brands realized that retail was moving to an era of greater customer experience and shopping integration, Lampert set up merchandise categories as warring factions. Next came the idea of starving the stores further to focus on making Sears more digitally savvy. Then he became enamored with an emphasis on making Sears “member-driven” by launching “Shop Your Way,” a frequency shopping scheme that only served to lower margins without restoring necessary sales growth.

After witnessing nearly a decade of flailing, in 2013 I publicly declared Sears “the world’s slowest liquidation sale” and suggested that they were a dead brand walking.

I have to admit that Sears has hung in there longer than I would have thought. The degree to which Lampert has been able to extract value from Sears assets has been surprising and remarkable. But he is rapidly running out of rabbits to pull out of his hat.

First, and most importantly, Sears has never laid out any realistic strategy to reverse a nearly perfect string of comp store declines for both the Sears and Kmart brands extending back to 2004. Sears cannot possibly cut enough costs to restore positive operating cash flow without growing top-line sales significantly.

Second, most store closings only make things worse. Contrary to popular belief, stores are needed to drive online sales, and vice versa. Sears’ fundamental problem is not too many stores, it is that is has become a brand that is no longer relevant enough for the assets and operating scale it has in place.

Third, with massive operating losses assured for the foreseeable future, Sears must raise a lot of cash to stay afloat. And it has already sold almost all the good stuff.

Yes, the presumably imminent sale of the Kenmore and DieHard brands may fetch in excess of a billion dollars. Yes, there is some real estate left to unload. Yes, the Home Services and Auto Centers retain some meaningful value. But don’t let the financial engineering strategies gloss over the fundamental point. There is no viable operating strategy to restore Sears to a profitable core of any material size. And unless the company can generate cash from operations before running out of assets to fund its staggering losses, it is not, in any practical sense, a going concern.

The company has been liquidating for many years now. It’s just that some of us are finally starting to notice.

 

This post originally appeared on Forbes where I recently became a contributor. You can check out more of my writing by going here.